OPEC FUND QUARTERLY 2 2025 The OPEC Fund for International Development
Read all about it! The 2025 OPEC Fund Development Forum See page 34
Could tariffs bring down the shutters on the Global South? Handle with care Can tourism and sustainable
development work as a long-term package?
Alongside its benefits, tourism also poses a number of challenges
Angus Downie Senior Economist, OPEC Fund
VIENNA CALLING Interview with Thomas Madreiter, Director of Urban Planning
ON THE MOVE Rethinking migration and development in the MENA region
The OPEC Fund Quarterly is published four times a year by the OPEC Fund for International Development. The OPEC Fund works in cooperation with developing country partners and the international development community to stimulate economic growth and social progress in low- and middle-income countries around the world. The organization was established by the member countries of OPEC in 1976 with a distinct purpose: to drive development, strengthen communities and empower people. Views and opinions expressed by guest contributors are solely the authors’ and don’t reflect the opinions or beliefs of the OPEC Fund. The OPEC Fund Quarterly is available free. If you wish to be included on the digital distribution list, please contact us via opecfund.org . Back issues of the magazine can be found on our website. The contents of this publication do not necessarily reflect the official views of the OPEC Fund or its Member Countries. Any maps are for illustration purposes only and are not to be taken as accurate representations of borders. Editorial material may be freely reproduced, providing the OPEC Fund Quarterly is credited.
PUBLISHERS The OPEC Fund for International Development Parkring 8, A-1010 Vienna, Austria Tel: (+43-1) 51564-0 Fax: (+43-1) 51392-38 www.opecfund.org
EXECUTIVE EDITOR Nadia Benamara EDITOR Axel Reiserer EDITORIAL TEAM Angus Downie, Valerie Herzog, Howard Hudson, Mahdi Rahimi, Axel Reiserer, Nicholas K. Smith PHOTOGRAPHS Abdullah Alipour Jeddi (unless otherwise credited) PRODUCTION Iris Vittini Encarnacion DESIGN Robin Turton, More Tea Design Ltd PRINTED IN AUSTRIA Print Alliance HAV Produktions Gmbh
This publication is printed on paper produced from responsibly managed forests. Front cover illustration: Abubakar Muneer – stock.adobe.com; AKrasov – stock.adobe.com; DifferR – stock.adobe.com; elenabsl/Shutterstock; Larus – stock.adobe.com; nsit0108 – stock.adobe.com; petovarga – stock.adobe.com; stomy – stock.adobe.com; ylivdesign – stock.adobe.com; Robin Turton
CONTENTS
5-25
CHRONICLE OF CURRENT EVENTS Cover story Tourism and Development: How to make it sustainable
6-11 When paradise pays the price: How can tourism and sustainable development co-exist? 12-13 “A change of latitude would help my attitude”: Can a rapid switch to sustainable tourism be achieved? 14-17 How climate events are redefining our world in unexpected ways 18-21 Rethinking
migration and development in the MENA region
22-25 Dealing
Tourism and Development p 6-13
with debt for a fairer future across the Global South
IN OTHER SECTIONS
In the Field 26-27 The OPEC Fund in Zimbabwe: A delegation observes how trade is strengthening food security Spotlight 28-31 Interview Thomas Madreiter, Director of Urban Planning, City of Vienna: “The basis of all our activities is that no one should be left behind” Development News 32-33 New OPEC Fund projects in Bangladesh, Botswana, Burkina Faso, Côte d’Ivoire, Kenya, Malawi and Uzbekistan
Events 34-41 34–37 OPEC Fund Development Forum 38 SIDS Summit, Vienna 39
Review 42-45
Gernot Wagner: “The climate race is on, and despite the best attempts by some, there’s no going back”: An overview of the climate
World Bank Spring Meetings, Washington, DC Islamic Development Bank Annual Meeting, Algiers
40
economist’s latest book Climate Race: Collected Essays The Back Page 46 OPEC Fund training courses for member
41
Arab Monetary Fund Annual Meeting,
Kuwait; Joint workshop on Environmental and Social Safeguards with African Development Bank
countries’ representatives deepen understanding and cooperation
Photo: PeopleImages.com - Yuri A/Shutterstock
EDITORIAL
A DOUBLE-EDGED SURFBOARD Dear Reader, T he summer holidays are upon us and despite a highly uncertain global political and economic outlook
“full account of its current and future economic, social and environmental impacts, addressing the needs of visitors, the industry, the environment and host communities.” It clearly is “an idea whose time has come,” to quote Victor Hugo. Out of necessity: Many islands are sinking while many iconic mountains are littered with huge piles of rubbish (see pages 12-13). Out of self-awareness: As a seasonal activity tourism can provide sustained inflows only in rare cases and overdependence calls for diversification of the economy. Out of acceptance: Ecotourism, which began as a grassroots movement in the 1980s, is now firmly established in the sector and enjoying above average growth rates in a highly competitive market. To illustrate these developments our special feature also offers a direct comparison between two contrasting approaches to tourism: Phuket in Thailand is one of the most popular destinations in the world, drawing millions of visitors every year. By contrast, Costa Rica has positioned its tourism sector on much lower numbers, while offering high-quality ecotourism. Which does better? Without giving anything away, here is our advice: Before booking your next holiday, read this issue of the OPEC Fund Quarterly. We also recommend taking your personal copy of our magazine to the beach (or wherever you’ll relax this summer) for a good read on many other interesting subjects. Did you, for example, know about the impact of climate change on a traditional spicy meal? As the world gets hotter new research shows that chili peppers are losing their heat (see pages 14-17). It’s not just tourists who are on the move; climate change is also a significant driver of migration. Climate
migration linked to deteriorating traditional living environments is expected to increase dramatically in the coming decades. The UN’s International Organization for Migration (IOM) speaks of 200 million environmental migrants by 2050. Migration can be a huge challenge, first and foremost for people forced from their homes, but also for host communities. Decades of neglect and disconnection have deeply poisoned the well. Avoiding permanent toxic damage requires the right policies and investments, argues Othman Belbeisi, IOM Regional Director for the Middle East and North Africa (see pages 18-21). As we are honored to welcome more and more external contributors to our publication, we would like to emphasize that the views and opinions expressed are solely the authors’ and don’t reflect the opinions or beliefs of the OPEC Fund. The current crises and challenges the Global South is facing were also the focus of the fourth OPEC Fund Development Forum in Vienna in mid- June. Under the banner A Transition that Empowers Our Tomorrow , the Forum and side events saw major announcements like the launch of an OPEC Fund Trade Finance initiative, a US$2 billion pledge by the Arab Coordination Group in support of sustainable development in Mauritania and the agreement on more than US$1 billion in new development financing. This ambitious agenda sets the tone for a busy autumn period with the next UN Climate Change Conference COP30 only one of many highlights. We wish you a beautiful summer and an interesting read.
(to say nothing of the weather), tourism is expected to continue its recovery from the COVID-19 period. According to the UN’s World Tourism Barometer, over 300 million tourists travelled internationally in the first quarter of 2025 – a five percent rise on last year and three percent more than pre-pandemic 2019. The travel outlook remains cautiously optimistic with almost half of all experts expecting “better” or “much better” prospects for May-August 2025, according to the same survey. But the current volatility is beginning to play out: The latest survey by the European Travel Commission, an association of 36 national tourist boards, reveals a drop in long-haul travel interest. “Growing cost concerns, geopolitical instability and weakening consumer confidence are influencing consumer decisions across key markets,” the report says. This shift will also have an impact on many countries of the Global South, where tourism is often a major source of income, yet also a (growing) cause for concern. Overtourism affects many small island nations, as well as countries with natural or cultural heritage. As OPEC Fund Senior Economist Angus Downie writes: “Tourism presents a significant opportunity for economic development. However, tourism also poses a number of economic, social and environmental challenges” (see pages 6-11). The answer is not to throw out the bather with the pool water (so to say), but to make tourism more sustainable. The UN Environment Programme defines sustainable tourism as taking
Axel Reiserer, Editor
4
COVER STORY
TOURISM AND DEVELOPMENT When generating revenue is no longer (good) enough: How tourism must adapt to the new realities of climate change and sustainability
5
TOURISM AND DEVELOPMENT
WHEN PARADISE
PAYS THE PRICE
As a major global industry, tourism presents a significant opportunity for low and middle-income countries. Yet it also poses a number of economic, social and environmental challenges that can undermine sustainable development By Angus Downie, Senior Economist, OPEC Fund
W hile one man’s holiday is another man’s income it increasingly also is a third man’s problem. The Université du Luxembourg concludes a recent study on the impact of tourism with the warning: “Chasing profits at the expense of nature and culture can turn paradise into self-destruction.”
It is a timely reminder. Tourism is a major global industry, contributing over 10 percent to global GDP and generating millions of jobs worldwide, according to the World Bank and the World Tourism Council. For low and
middle-income countries (LICs and MICs), especially Small Island Developing States (SIDS), tourism presents a significant opportunity for economic development, cultural exchange and environmental preservation. However, alongside its many benefits, tourism also poses a number of economic, social and environmental challenges that can undermine sustainable development if not properly managed.
6
COVER STORY
Tourism in LICs and MICs: Opportunities and challenges
Opportunities Tourism brings a range of advantages, many of which are extremely helpful to LICs and MICs that have few economic advantages due to their small size, geographic isolation, lack of manufacturing comparative advantage and limited capacity and knowledge to develop revenue generating activities. 1. Economic growth and employment Tourism is often one of the largest sources of foreign exchange in LICs and island MICs. It can stimulate the economy by creating jobs in hotels, restaurants, tour operations, transport and the cultural sector. For SIDS like the Maldives, Fiji or Saint Lucia, tourism can account for more than 30 percent of GDP. The sector also promotes indirect employment in agriculture, handicrafts and other supply chains. 2. Infrastructure development To accommodate tourists, governments and private investors often fund the construction of roads, airports, water systems and communications infrastructure. These improvements can benefit local residents by increasing accessibility to basic services and reducing isolation, especially in rural areas and island communities. 3. Cultural exchange and global awareness Tourism fosters greater global understanding and appreciation of local cultures, traditions and heritage. In many countries, cultural tourism encourages the preservation of indigenous languages, crafts, music and historical sites. This is especially important in SIDS, where unique cultural identities are both a key attraction and a vulnerable asset. 4. Incentives for environmental conservation Tourism can provide financial incentives to preserve natural areas and biodiversity. Ecotourism initiatives in countries like Costa Rica and Belize have helped protect rainforests and marine ecosystems. Marine-based tourism in island states can encourage the establishment of marine protected areas and promote sustainable resource use.
Challenges
4. Social and cultural disruption Mass tourism can lead to the commodification of culture, the erosion of traditional lifestyles and rising inequality. In some regions, the influx of tourists has caused inflation, land displacement and increased real estate prices, pushing locals out of their communities. Cultural performances and rituals may be altered or performed solely for tourist consumption, leading to loss of authenticity. 5. Infrastructure strain and overtourism In popular destinations, infrastructure may not be able to cope well with the seasonal influx of tourists (Venice is a prime example). Overcrowded transport systems, water shortages and strained health services can degrade the quality of life for residents. SIDS with limited land and resources are particularly vulnerable to these pressures. The impact on essential infrastructure can hit the local population severely with even basic supplies becoming increasingly scarce and unaffordable.
At the same time, tourism can exacerbate problems in already fragile and weak countries. The idea of tourism driving development can often be discounted due to its exclusivity, overuse of scarce resources and diversification of limited funds to a small section of the (temporary) population at the expense of most locals, often the poorest that are in greatest need. 1. Economic dependence and volatility Relying heavily on tourism makes LICs and MICs vulnerable to external shocks such as pandemics, natural disasters and geopolitical tensions. The COVID-19 pandemic devastated tourism-dependent economies, especially SIDS, where travel bans and lockdowns caused unprecedented economic contractions. Such dependence also diverts attention from the need for more sustainable economic diversification. 2. Limited local benefit Tourism revenues often do not stay in the local economy. Foreign-owned resorts, airlines and tour operators may repatriate
profits, leaving only low-wage jobs for locals.
In conclusion
A sustainable tourism strategy is essential for maximizing the positive impacts of tourism while minimizing its negative effects.
Tourism in LICs, MICs and
This phenomenon, known as “leakage,”
SIDS offers a powerful tool for economic advancement and cultural promotion – if developed responsibly. However,
reduces the net benefits of tourism. In some LICs and MICs, this leakage can be as high as 80 percent.
without careful planning and regulation, its benefits can be undermined by environmental harm, social disruption and economic vulnerabilities. A sustainable tourism strategy – one that emphasizes community participation, environmental stewardship and economic inclusivity – is
3. Environmental degradation Tourism can often put pressure on fragile ecosystems, especially
in small islands where space and resources are limited.
Overdevelopment, waste generation, coral reef damage from cruise ships and increased freshwater use are common issues. Unregulated tourism has contributed to beach erosion and pollution in destinations such as Bali and the Caribbean.
essential for maximizing the positive impacts of tourism while minimizing its negative effects. While this may sound obvious, it is more difficult to deliver in what are already fragile and weak countries.
7 7
TOURISM AND DEVELOPMENT
Why develop tourism in low-income countries?
Charting a path of sustainable development Despite challenges, tourism remains a highly attractive development option for many LICs for several key reasons.
Limited alternatives: Many LICs lack the capital,
Bhutan uses tourism as a development tool while enforcing strict sustainability measures.
infrastructure or natural resources to develop large-scale manufacturing or extractive industries. Tourism, especially nature-based or cultural options, can generate income with relatively low initial investment. Foreign exchange and job creation: Tourism is often one of the fastest ways to earn foreign currency and create jobs, especially for women and youth. In many cases, it provides employment in areas where few alternatives exist. Leverage of natural and cultural assets: Many LICs, MICs and SIDS possess unique attractions – pristine beaches, biodiversity and rich cultural traditions – that are difficult for other countries to replicate. Tourism allows them to monetize these assets without depleting them, at least in theory.
Do the disadvantages outweigh the advantages?
Is tourism really beneficial?
Not necessarily – but it depends on how tourism is managed. The disadvantages of tourism, such as environmental degradation, economic leakage and cultural disruption tend to occur when tourism is: • Poorly planned (e.g., lack of zoning or environmental protection). • Overly relied on (with little economic diversification or spillovers). • Dominated by foreign entities (limiting local benefits and increasing leakage). • Not community-inclusive (excluding locals from decision-making or profit sharing). In contrast, well-managed, community- based and sustainable tourism can generate net positive outcomes, especially if profits are reinvested in local infrastructure, education and environmental protection.
Tourism can be genuinely beneficial, but it is not a silver bullet to the development challenges that many LICs face. It must offer many, often competing, benefits in sometimes complex settings amid a backdrop of entrenched poverty, joblessness and deprivation. For this tourism has to be: • Strategically developed to ensure long-term resilience and benefit- sharing. • Complemented by other sectors (like agriculture, education and manufacturing) to avoid over- dependence. • Monitored for sustainability, including caps on tourist numbers and robust environmental regulations. For example, countries like Costa Rica and Bhutan have used tourism as a development tool while enforcing strict sustainability measures. On the other hand, overtourism in places like Thailand or Bali has highlighted the dangers of unchecked growth. The bottom line is: Tourism in low-income countries is a double- edged sword. It can drive growth and opportunity – or exacerbate inequality and environmental harm. Its success depends, unsurprisingly, on how it is planned, managed and integrated into a broader development strategy.
Investment in infrastructure: A potential benefit of tourism
Development catalyst: Tourism can trigger broader economic activity, encouraging investment in infrastructure, small businesses and even governance reforms when tourism becomes a national priority.
Sustainable tourism in Costa Rica
Photo: Galyna Andrushko/Shutterstock
8
COVER STORY
Machu Picchu, Peru
Himmafushi, Maldives
Photo: Pe3k/Shutterstock
Photo: Daniel Prudek/Shutterstock
• Cambodia: Angkor Watt • Peru: Machu Picchu • Philippines: Boracay • Thailand: Koh Phi Phi, Koh Samui, Phuket • Nepal: Mount Everest • Pacific Ocean: Cook Islands, Fiji and parts of French Polynesia • Caribbean: Aruba, Dominica, Jamaica and Saint Lucia • Indian Ocean: Maldives, Mauritius, Mayotte, Réunion, Seychelles
Examples of low- and middle-income destinations affected by overtourism
Mount Everest, Nepal
Examples of advanced economy destinations affected by overtourism
Spain: Barcelona, Ibiza, Mallorca Croatia: Dubrovnik Italy: Rome, Venice Netherlands: Amsterdam
Rome, Italy
Greece: Santorini Iceland: Reykjavik
Gullfoss, Iceland
Santorini, Greece
9
TOURISM AND DEVELOPMENT
Tourism in the Global South: A comparative look at contrasting approaches to tourism outcomes – both countries are in the same income bracket,
Phuket, Thailand – The costs of overtourism
Country context: Thailand is a lower-middle-income country. Phuket is one of its most
Outcomes: Tourism generates a large share of Thailand’s economy, supporting jobs and infrastructure. However, negative impacts include: • Environmental degradation (coral reef damage, water scarcity, plastic pollution). • Traffic congestion and overburdened infrastructure. • Loss of cultural authenticity and local resentment in some communities. • Economic leakage – significant profits flow to foreign investors and large hotel chains. Key lessons: • Rapid, unregulated tourism growth can harm both the environment and local communities.
popular tourist destinations, drawing millions annually.
Tourism strategy: • Focused on mass tourism
targeting international travelers, especially from Australia, China and Europe. • Rapid, large-scale development of hotels, resorts and nightlife infrastructure. • Weak enforcement of zoning laws and environmental protections.
• Overtourism can reduce quality of life for residents and damage the tourist experience. • Economic gains are often unevenly distributed, exacerbating inequality.
Photo: Gill_figueroa /Shutterstock
Phuket: A cautionary example of what happens when economic gains are prioritized over sustainability and local well-being.
10
COVER STORY
A tale of two destinations development. Phuket and Costa Rica offer constrasting but the approach to tourism makes the critical difference
Costa Rica – A model of sustainable tourism
Country context: Costa Rica is a middle-income country in Central America with abundant biodiversity and a strong commitment to environmental protection. Tourism strategy: • Emphasized ecotourism and nature-based tourism rather than mass tourism. • Invested in protected areas – over 25 percent of the country’s land is under conservation. • Encouraged local ownership of tourism services such as eco- lodges, guided tours and farms. • Promoted education and training
Outcomes: Tourism accounts for around 6–8 percent of GDP and employs more than 200,000 people. • Significant foreign exchange earnings while maintaining a strong environmental record. • Attracted higher- spending tourists with lower volumes – minimizing overcrowding. • Globally recognized as a leader in sustainable tourism and green growth. Key lessons: • Environmental conservation can coexist with economic development. • Community involvement is crucial – locals benefit
to develop human capital in tourism and conservation.
Photo: Marco Lissoni/ Shutterstock
directly and support conservation efforts. • Policy consistency
and government support make a huge difference.
Photo: iacomino FRiMAGES/Shutterstock
Costa Rica: A long-term,
conservation-driven model that balances profit and preservation.
11
TOURISM AND CLIMATE CHANGE
“A CHANGE OF LATITUDE WOULD HELP MY ATTITUDE”
Tourism is back to pre-pandemic levels. But so are the impacts on vulnerable ecosystems and communities in the Global South. A rapid switch to sustainable travel is imperative, but remains a distant proposition By Axel Reiserer, OPEC Fund
T he period between the end of February and the beginning of March this year was difficult for Himachal Pradesh, a state in the northern part of India located in the Western Himalaya. “Incessant bouts of heavy rainfall” triggered flash floods and landslides, local media reported. Vehicles were swept away and almost 600 roads had to be closed within hours. Yet, in less than a week Himachal Pradesh was back to normal – and tourists returned in large numbers, seeking the cooler climate of the mountains. This pattern can be found all over the world. Global tourism is back to pre-pandemic levels with 1.4 billion international travelers, according to the UN World Tourism Barometer. Growth is expected to continue throughout 2025, the UN Tourism organization says, while recalling “our immense responsibility as a sector to accelerate transformation, placing people and planet at the center of the development of tourism.” Although tourism has bounced back across the board, increases have been particularly strong in the Global South: Africa welcomed 7 percent
more arrivals in 2024 than in 2019, the Middle East recorded an increase of 32 percent compared to pre-pandemic levels and Asia and the Pacific also continued a rapid recovery with 316 million international visitors last year alone. The sector is critically important for economic growth, with tourism generating up to 10, 12 and 15 percent respectively in African, Asian and Caribbean countries, according to UN estimates. Yet tourism does not only create wealth. The industry is “both a cause and a victim of climate change,” as Tourism Watch, a non-governmental monitor, says. The numbers are well documented and generally undisputed: According to the World Travel and Tourism Council (WTTC), an industry forum, in 2023 travel and tourism accounted for 6.5 percent (3.41 billion tonnes CO2 equivalent) of all global emissions. From 2009 to 2013 alone, emissions increased four times more than previously estimated. It was the COVID-19 pandemic which eventually halted the unstoppable rise, yet only temporarily.
“Since tourism generates a lot of economic advantages and opportunities,
we have tried to overexploit these ecologically sensitive areas.”
Abinash Mohanty, Head of Climate Change and Sustainability, IPE Global
12
Photo: Courtesy of Abinash Mohanty
COVER STORY
In 2023 travel and tourism accounted for 3.41 BN tonnes of CO2 emissions From 2009 to 2013 emissions increased four times more than previously estimated
“The urgency of climate change is clearer than ever,” the report says
Equally well documented and – more or less – undisputed are the impacts of climate change on fragile ecosystems in the Global South. The loss of arable land, coral reefs, deforestation, water supplies and biodiversity trigger many further consequences, leading to losses of livelihoods and lives, threatening entire nations. The damage to the environment also undermines the very foundation of tourism: “Largely, the pattern of tourism in the Global South is related to ecology,” said Abinash Mohanty, Head of Climate Change and Sustainability at IPE Global, a business advisory, and expert reviewer of the Intergovernmental Panel on Climate Change (IPCC). “Since tourism generates a lot of economic advantages and opportunities, we have tried to overexploit these ecologically sensitive areas. Of late, changing weather patterns and climate-linked disasters have been triggered in these places.” The Himalayan episode of Himachal Pradesh is but one example. Over the years, tourist destinations have been losing the very essence of what draws people to these places in the first place – the forest cover, the clean sea, the pristine lake, the ecology and nature. “What we’re witnessing is a system straining at its seams, where climate- triggered events are exposing poor planning and outdated infrastructure,” says Uttam Banerjee, co-founder and CEO of Ekam Eco, a sustainable living start-up. The losses are enormous. In the Maldives, rising sea levels threaten 80 percent of the land area, impacting beach resorts and resulting in potential losses of up to 38 percent of GDP.
In Kenya, droughts
the important role tourism plays in climate change, the travel industry was invited to the UN Climate
reduce wildlife populations in national parks, slashing tourist arrivals by 30 percent during extreme dry
Change Conference COP29 in Baku last November for the first time following the signing of the “Glasgow Declaration on Climate Action in Tourism” in 2021. The declaration promises “strong action and commitment to accelerate climate action.” Yet, while the number of signatories has risen to 900 to date, most have still not published their action plans. Furthermore, the largest contributor to climate change in the sector, the aviation industry, has not signed up to the convention. Nor have most cruise lines. So it is hardly surprising that a December 2023 Global Stocktake on Tourism and Climate Action by over 60 experts found “insufficient commitment to climate action.” Considering the fact that the “vast majority” of tourism’s global footprint is produced by wealthy nations, “global mitigation policies for tourism need to address questions of climate justice,” the report said. The stocktake also found that only eight percent of projects funded by development banks, UN agencies, national development corporations and NGOs between 2000 and 2022 were likely to advance climate resilient tourism. Susanne Becken, Professor of Sustainable Tourism at Griffith University, Australia, concludes: “Climate finance must consider climate vulnerabilities of tourism and assess whether tourism will be an appropriate development mechanism in the future.”
seasons. In Nepal, melting glaciers affect trekking and mountaineering tourism, with estimates suggesting US$50 million annual losses in this segment of tourism alone. Faced with these challenges, patterns and approaches are changing. Governments have realized that action is not only necessary, but urgently overdue. In 2024, Indonesia announced plans to move its capital from Jakarta to Nusantara, because the former is sinking at an alarming rate. This is a fate the metropolis shares with other massive conurbations like Bangkok, Lagos, Mumbai and the capitals of several Small Island Developing States. The tourism industry has also woken up. The WTTC published a report last year entitled A Net Zero Roadmap for Travel & Tourism which states: “The urgency of climate change is clearer than ever. Travel & Tourism is both heavily affected by its effects and a significant emitter of greenhouse gases.” The roadmap aims for tourism to achieve carbon neutrality through a combination of emissions reduction and removal in the period 2020-2030 and gradually achieving complete net zero across the entire tourism value chain. However, critics argue that such solemn words are often not followed up by concrete action. Recognizing
13
CURRENT AFFAIRS CLIMATE CHANGE AND SOCIETY
In the coming decades, the climate crisis will cause the world to change in many expected and unexpected ways. In this issue, we bring you three of them By Nicholas K. Smith, OPEC Fund E ven if world leaders somehow get us to the “best case scenario” during certain regions cope with stronger and more frequent extreme weather events? A CHANGE OF CLIMATE PERSPECTIVE
the unfolding climate crisis, humans will still endure a more dramatic change to the planet in such a short span of time – perhaps one or two generations – than they ever have. Some of those changes are well- known and well-modeled: How will sea levels rise if ice shelves melt? How will
What might migration patterns look like if people move en masse to more temperate areas? Other changes may appear less dramatic, but will nonetheless leave their mark on who we are, how we eat and what we do for fun in minor and not-so- minor ways.
14
CURRENT AFFAIRS
Take me out to the ballgame For a large chunk of the world,
attend and less profitable for the bottom line. That’s the finding from a study published earlier this year in American Economic Journal: Applied Economics . A trio of researchers examined five decades of weather reports from MLB games and how they correlate with fan attendance and club revenue. The study, “The Willingness to Pay for a Cooler Day: Evidence from 50 Years of Major League Baseball Games”, takes a unique look at one effect of the warming world – not one of catastrophic upheaval but one of discomfort. After all, fans are
summertime means baseball. Fans flock to ballparks across North America, Latin America and East Asia to catch some sun and perhaps a fly ball. No league is bigger to the game than Major League Baseball (MLB), where 30 teams from the USA and Canada field rosters of players from nearly every continent. Yet watching these teams in their natural habitats, open-air stadiums, may be getting more and more uncomfortable as rising temperatures make outdoor games less desirable to
“Rising temperatures make outdoor games
less desirable to attend and less profitable for the bottom line.”
15
TOURISM AND CLIMATE CHANGE
In Major League Baseball games, researchers estimate a US$1.53 utility loss per hour of exposure to high temperatures.
to be a chili shortage caused by a drought in
Mexico. Last year, another hiccup delayed production because the chilis were not
ripe enough to harvest. Supply chain issues are not the
only problem in the chili market, as you cannot simply swap one type for another. Needless to say, everyone from chefs to Sriracha sauce makers are trying to capture a particular taste and temperature. Losing that ability isn’t a minor thing either, it marks a fundamental change to food culture itself. Along with its list of World Heritage Sites, the United Nations Educational, Scientific and Cultural Organization (UNESCO) also has various lists of intangible cultural heritage. Beyond centuries-old ruins or contemporary examples of important architecture, intangible cultural heritage can include areas as diverse as traditional silk production in Central Asia, shrimp fishing on horseback in Belgium and traditional music and dance in Côte d’Ivoire. Food also features on UNESCO’s Intangible Cultural Heritage Lists, such as the cuisine from the Mexican state of Michoacán, which relies on chili peppers in order to deliver that distinctive kick – without which, the taste that has existed for centuries may disappear forever. “It sounds terrible, but once these peppers are gone, you cannot recreate their original taste,” agronomist Jorge Berny told Bloomberg. “You can replace them with something else, but it’s not the same.”
Chillier chilies It will come as no surprise that a warmer world will make it harder to reliably grow crops, especially in agricultural areas that must now contend with more extreme natural disasters like floods and droughts. What might be a surprise is that those crops won’t be quite the same as what we had been used to. Bloomberg, the news and data provider, recently reported that chili peppers are losing their heat due to extreme weather in areas where the peppers are commonly grown. Not only has supply been disrupted and have prices gone up, but the spiciness of chilis has gone down. According to the article, potent peppers thrive in hotter and drier conditions. More intense rainfall and extra moisture dilute the heat-producing alkaloids that make particular types of chilis so sought after in cuisines around the world. This is not the first time spicy foods have made global news. In 2022, Huy Fong Foods temporarily halted production of their popular spicy red Sriracha sauce, commonly sold in a red plastic bottle emblazoned with a rooster on its label. The culprit turned out
less likely to attend games in extremely hot or cold temperatures (although the latter is far less frequent due to the MLB’s spring-to-fall schedule). The researchers estimate a US$1.53 utility loss per hour of exposure to high temperatures. Given all the hours played in so many locations, this translates to what the study calls “nontrivial aggregate welfare effects” – or in layman’s terms, a significant hit to revenue every time your team plays in high temperatures. Perhaps that’s why you see more and more baseball stadiums built with retractable roofs, which can be opened or closed to keep the temperature pleasant for the tens of thousands of fans that (usually) pack the stadiums. Of the 30 MLB stadiums, seven have such a feature. The newest stadium, planned for Las Vegas, will be completely enclosed. In the coming decades, climate will play a bigger role in how and where we watch sports. This season, Florida’s Tampa Bay Rays play in a much smaller minor league stadium, while their MLB ballpark is being repaired following extensive damage from 2024’s Hurricane Milton. Football (soccer) fans
In Mexico, extreme weather is disrupting production, supply and even the flavor of chili peppers.
will recall the 2022 World Cup’s move from summer to late in the year to dodge host Qatar’s searingly hot temperatures, as well as the giant air
conditioning units keeping players and fans cool during an unprecedently hot tournament. Such seems to be the fate of many global outdoor sports: high temperatures will not go away anytime soon and anyone wishing to play ball will have to adapt to the new normal of extreme temperatures.
16
CURRENT AFFAIRS
Research in South Korea estimates that exposure to temperatures above 30°C in the second trimester lowers birth weight by 0.8 percent in the country.
High temperatures, low birthrates Predicting an optimal health policy in a warming world is about as tricky as predicting the weather itself, though surprisingly the two go hand in hand. A new study in the journal Weather, Climate, and Society finds a link between extreme temperatures and birth weight in South Korea. A researcher from the Korea Institute of Public Finance estimated that
Second, one can presumably infer that lower-income mothers have fewer opportunities to avoid high temperatures compared to the higher income group, meaning that
although healthcare services are readily available in South Korea, poor people are still more susceptible to temperature shocks. National policies, especially in places with less advanced or accessible healthcare systems, would be wise to take income into account when designing extreme temperature care for pregnant women. Finally, birth rates are
exposure to temperatures above 30°C (85°F) in the second trimester lowers birth weight by 0.8 percent in the country. According to the study, this negative effect was more apparent in the lowest quarter household income group than that of the highest quarter.
declining worldwide but nowhere more so than in South Korea, which already has one
This finding matters for a number of reasons. First, the link between higher temperatures and lower birth rates is corroborated by similar studies in many different countries. Compared to the USA, China and various Andean nations, South Korea has a higher average temperature during the hottest month of the year. Therefore, as temperatures rise, South Korea may offer a reference point for other countries that are showing similar temperature patterns.
of the world’s lowest birth rates (in addition to one of the longest life expectancies). Generally, without large-scale immigration, an average of 2.1 babies per woman is needed to stabilize the population. South Korea’s fertility rate in 2024 was 0.75 babies per woman. The long-term effect of this is a dramatic population decline. After reaching a peak with 51.83 million in 2020, Statistics Korea estimates that by 2072 that number will shrink to 36.22 million, a loss of 30 percent. From community events to national cuisines to the health of the next generation, climate change is set to redefine our world in so many ways. The question now is: How can we score a home run for climate action?
“Without large-scale immigration, an average of 2.1 babies per woman is needed in order to stabilize the population.”
17
GUEST CONTRIBUTION
RETHINKING MIGRATION AND DEVELOPMENT IN THE MENA REGION With the right policies and investment, migration can be a development opportunity By Othman Belbeisi, Regional Director for the Middle East and North Africa (MENA), International Organization for Migration (IOM)
A cross the Middle East and North Africa (MENA), climate change is not a distant threat but a present and growing driver – directly or indirectly – of human mobility. From recurring floods in Sudan and Yemen to rising sea levels in North Africa and water scarcity in Iraq and Syria, environmental stress is forcing more people to move. But none of this occurs in a vacuum. Across this region, climate change interacts with pre-existing vulnerabilities including political instability, poverty, conflict and limited coping capacity to trigger displacement on a significant scale. A case in point is Sudan, where 11 million people have been forced from their homes, especially since the start of the civil war in April 2023. But the crisis is not just about war. It is also about the collapse of agriculture after years of drought, increasingly erratic monsoon rains, rising temperatures and frequent flooding which have damaged the ecosystems and degraded soils, combined with the absence of viable alternative livelihoods. Climate issues amplify conflict risks and conflict, in turn, accelerates environmental degradation – a vicious
cycle that drives more and more people from their homes. We are also witnessing this dynamic in Syria, where recovery and reconstruction efforts are underway in areas still struggling with shattered infrastructure, exhausted local economies and traumatized populations. While the return of displaced people can be a sign of stability, it also presents risks: of overwhelming fragile infrastructure and services inflaming local tensions or pushing people to move again, within countries, across borders, or even back to where they first took refuge. On the other hand, if managed inclusively, the return of the displaced to their homes can be an opportunity to rebuild, to provide infrastructure that is fairer to communities and fairer to the environment. The MENA region includes some of the most climate-vulnerable countries in the world. In Iraq, entire communities in some southern districts have been forced to migrate to urban areas due to the collapse of traditional agriculture and lack of alternative income sources. In Libya, Cyclone Daniel brought severe destruction and loss of life in September 2023.
Othman Belbeisi
Othman Belbeisi previously served as IOM’s Senior Regional Adviser for MENA in Geneva, as Chief of Mission in Libya, and Head of the Lebanon Office. He holds a master’s degree in Business Administration. IOM
IOM is the leading intergovernmental organization in the field of
migration and is committed to the principle that humane and orderly migration benefits migrants and society. Established in 1951, IOM is part of the UN system.
Views and opinions expressed are solely the author’s and don’t reflect the opinions or beliefs of the OPEC Fund.
18
GUEST CONTRIBUTION
“Across the region, climate change interacts with... political instability, poverty, conflict and limited coping capacity, to trigger displacement on a significant scale.”
19
GUEST CONTRIBUTION
“Mona opened a restaurant with a little help from IOM. Now she’s able to send her children to school, is creating new jobs and considering expanding.”
Coastal zones in Tunisia and Egypt face increased risks from sea-level rise and saltwater intrusion – a major threat to freshwater supplies. And in Yemen, a country already devastated by years of war, climate change has become a threat multiplier. Droughts, floods, storms of increased ferocity and water scarcity are worsening food insecurity, disrupting rural livelihoods and driving internal displacement. More than four million people remain displaced, with many living in informal settlements without access to clean water, sanitation or healthcare. In response, the International Organization for Migration (IOM) is working with local authorities and communities to deliver integrated services – including solar-powered water systems, rehabilitated shelters and climate-resilient infrastructure –
while strengthening conflict-resolution mechanisms to resolve tensions over access to scarce natural resources at community level. These are not just humanitarian interventions; these are investments in stability. Crucially, we are also supporting
community-based disaster risk reduction, helping vulnerable
Climate change, displacement, humanitarian response and development are not separate issues. They are deeply connected. Migration is clearly a humanitarian concern, but it is also a development opportunity and must be supported with the right policies and investment. In Tunisia, IOM is piloting climate- resilient agricultural cooperatives that offer young people an alternative to risky migration. In Sudan, we support natural resource management initiatives to reduce tensions between displaced communities and host populations as part of our peacebuilding activities. In Iraq, we work with local authorities to map environmental hazards and integrate human mobility into urban planning. We can take heart and gain inspiration from migrants and refugees themselves. People like Mona, who fled Sudan for Libya. When she could not find work as a teacher she decided to open a restaurant with a little help from IOM. Now she’s able to send her children to school, is creating new jobs and considering expanding. These efforts show promise, but they are small-scale, local and short-
populations and communities prepare for and recover from disasters triggered by extreme weather events such as storms and flooding. This includes restoring water sources, improving irrigation systems and promoting local climate adaptation plans. Yemen reminds us that climate resilience is not possible without peace. At the same time, it stands as evidence that peace will always be fragile without sustained investment in climate adaptation and development.
Climate change interacts with pre-existing vulnerabilities in Sudan (left) and saltwater intrusion is a threat to livelihoods in Tunisia
20
GUEST CONTRIBUTION
term. What we need is a shift in how development actors – including multilateral development banks – design, finance and implement integrated climate and migration responses that address both the immediate needs of the affected populations as well as long- term development needs. This means three things: First, we should invest in anticipatory action and disaster risk management (such as early warning systems) while making sustainable livelihoods accessible for the affected populations. Financing must prioritize areas at risk of displacement, not just those already in crisis. Second – and this is at the heart of what IOM already does – we need to support host communities, not just displaced people, to promote social cohesion. Development aid must strengthen services and local governance in the towns that are mainly growing due to climate factors. Third, we must use our local presence to amplify the voices of those most affected. Increased availability and accessibility to regular migration pathways is critical. Our role is to support, not restrict, migration choices, ensuring they are safe and voluntary. In this, young people, who represent around 30 percent of the MENA population, are pivotal. They are disproportionately exposed to climate risks due to limited livelihood and resilience opportunities. At the same time, they are powerful agents of innovation, leadership and sustainable development. There is no stopping climate change from influencing human mobility in this region. But there is still time to shape how it happens. Migration, if well- managed, can be a force for resilience, innovation and stability. Poorly managed, it can deepen divisions, overwhelm systems and escalate tensions. So, what do we do, as we stand at this crossroads of climate change? Do we continue to react to each new climate disaster with emergency appeals – or do we invest in a future where people are not forced to flee, but can adapt, thrive and move with dignity, by choice? This is a question for today. Not tomorrow.
In 2024 most migration from countries in Northern Africa and Western Asia was inter-regional. The largest proportion of immigrants from outside the region migrated from Central and Southern Asia. Numbers in brackets are the total of international migrants in 2024 whose place of origin or destination was in the region. Number of international migrants by regions of origin and destination, 2024
Origin
Destination
Europe (61 million)
Europe (94 million)
Central and Southern Asia (54 million)
Central and Southern Asia (20 million)
Latin America and the
Latin America and the Caribbean (48 million)
Caribbean (18 million)
Eastern and Southeastern Asia (23 million)
Eastern and Southeastern Asia (41 million)
Northern Africa and Western Asia (54 million)
Northern Africa and Western Asia (41 million)
Sub-Saharan Africa (24 million)
Sub-Saharan Africa (31 million) Northern America (4.6 million) Oceania (1.6 million)
Northern America (61 million)
Unknown (22 million)
Oceania (10 million)
Source: International Migrant Stock 2024, UN Department of Economic and Social Affairs
21
IN FOCUS CREDIT IN THE GLOBAL SOUTH
DEALING WITH DEBT FOR A FAIRER FUTURE ACROSS THE GLOBAL SOUTH Rating agencies aren’t powerful because they inform. They’re powerful because they’re systemically necessary. How fair and sustainable are these dynamics? By Daniel Cash, Senior Fellow, United Nations University Centre for Policy Research (UNU-CPR)
T he balance of power is shifting. With Official Development Assistance (ODA) recently cut in real terms by at least 1 percent, private creditors have become dominant across the Global South. According to UNCTAD, the organization promoting the interests of developing countries in global trade, private creditors are now holding 62 percent of all developing world debt. One of the implications of this development is the exceptional rise of the influence of credit rating agencies, because they “inform” how private creditors perceive sovereign risk. To put this into perspective: Developing countries’ average interest paid on external borrowing is now three
times higher than that of developed countries, with separate analysis showing that borrowing from the capital markets is costing African governments 500 percent more than borrowing from official creditors – money that might otherwise be spent on essential sectors like healthcare and education. Yet the relationship between Global South sovereign issuers and credit rating agencies remains relatively nascent and marked by deep asymmetry. Sovereigns often have little insights to rating agencies’ methodologies or insufficient opportunity to present their reforms and resilience strategies. All too often rating engagements leave issuers with extremely narrow windows to frame their narratives effectively. Compounding this gap is the limited in-country presence of rating agencies, especially in low-income nations. There are some ways to overcome this detachment. I am advocating a two- part structured dialogue that would, according to my research, improve the quality of rating engagements. The first part would be the establishment of Structured Peer Forums, where small clusters of sovereigns engage thematically with rating agencies outside the formal rating process. Thematic areas could include fiscal reforms, debt sustainability, governance resilience or external shocks.
The second complementary part would involve a light-touch, voluntary Charter to govern these forums, safeguarding confidentiality, ensuring procedural fairness and protecting participants. Crucially, it would not infringe on rating agencies’ independence or methodologies, nor compel sovereigns to disclose sensitive information. Multilateral development banks (MDBs) – potentially including the OPEC Fund – are ideally positioned to convene these forums because they can be embedded within existing capacity- building programs. Previous successful models include the World Bank’s Debt Management Facility’s Stakeholder Forums, which helped debt managers and investors engage more effectively, or the African Financial Markets Initiative led by the African Development Bank (AfDB), which enhanced market transparency and strengthened sovereign issuance capacity. However, both of these examples focus on technical assistance and market access – not on the relationship between sovereign and rating agency. The proposed dialogue would fill this gap by specifically addressing how governments present their case and how that is interpreted via the credit rating process. That is an important element that is missing from existing frameworks.
“Developing countries’ average interest paid on external borrowing is now three times higher than that of developed countries.”
Daniel Cash, Senior Fellow, United Nations University Centre for Policy Research
Views and opinions expressed are solely the author’s and don’t reflect the opinions or beliefs of the OPEC Fund.
22
Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48Powered by FlippingBook